Labor Market Expands, but Barely

Roy Maurer By Roy Maurer October 10, 2016
Labor Market Expands, but Barely

U.S. employers created 156,000 new jobs in September 2016, falling slightly below economists' expectations.

According to the Bureau of Labor Statistics (BLS), job growth has averaged 178,000 per month in 2016, compared with an average of 229,000 per month in 2015. The unemployment rate ticked higher in September to 5.0 percent from 4.9 percent in August. The college-level unemployment rate fell to 2.5 percent in September from 2.7 percent the month before.

"The headline payrolls and unemployment numbers were solid enough, but not the gangbusters report that might have created any pressure for a faster [federal interest] rate hike than December," said Jed Kolko, chief economist for job search engine Indeed, based in Austin, Texas.

"The numbers were still high enough to be considered expanding, but just barely," said Jennifer Schramm, SHRM-SCP, manager of workforce trends at the Society for Human Resource Management (SHRM). The labor market recovery continues to move forward, however sluggishly, she added. "These numbers align fairly well with what we've been seeing with our Leading Indicators of National Employment data. Continuous overall net gains in employment expectations, but not to the extent that we saw around this time in 2015."

Employment gains in September were heaviest in professional and business services (67,000), health care (33,000) restaurants and bars (30,000) and construction (23,000). Temporary jobs rose by 23,200 in September from the previous month, the highest increase of the year.

"Job growth over the past quarter continues to be an encouraging sign … but many companies are struggling to fill open positions," said Pete Lamson, CEO of Jazz, a hiring technology company based in Pittsburgh. "Employers are facing major competition in getting the right candidates and filling positions in a timely manner, and with the holiday season fast approaching, we're seeing increased pressure to make fast hires, especially in the retail sector," Lamson said. "As the retail job market is less challenging for employers, we'll likely see an increase in hiring in the holiday season."

Kolko noted that job growth was concentrated in lower- and middle-wage industries, with higher-wage industries lagging behind. "And while unemployment fell for those with college degrees, it jumped for adults with a high-school degree or less," he said. "The least well-off took a step back in September."

The BLS counted 7.9 million people as unemployed—defined as being jobless, having actively looked for work in the prior four weeks, and being currently available for work.

The unemployment rate for Hispanics increased from 5.6 percent in August to 6.4 percent in September, while the rates for adult men (4.7 percent), adult women (4.4 percent), teenagers (15.8 percent), Asians (3.9 percent), blacks (8.3 percent) and whites (4.4 percent), showed little or no change.

The number of long-term unemployed (those jobless for 27 weeks or more) sits at 2.0 million and accounts for 24.9 percent of the unemployed.

The number of individuals categorized as involuntary part-time workers—those seeking full-time employment but working part time—was unchanged at 5.9 million in September. The number of part-time workers "underlines concerns about underemployment and the quality of jobs that are being created," said Josh Wright, chief economist for applicant tracking system and recruitment software firm iCIMS, based in Matawan, N.J.

Additionally, 1.8 million people were considered marginally attached to the labor force—that is, they are unemployed but want and are available to work, and had looked for a job sometime in the previous 12 months. Among this group, 553,000 individuals were considered discouraged—not currently looking for work because they believe no jobs are available for them.

The remaining 1.3 million people marginally attached to the labor force in September had not searched for work in the past month for reasons such as school attendance or family responsibilities, according to the BLS.

The labor force participation rate—at 62.9 percent—is "still lower than we would like to see, but when looked at overall, the pace of growth for 2016 has been pretty good," Schramm said.



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